Financial Statement Analysis
- This course is aiming to provide students the basic skills and techniques to analyze financial statements for the purpose of valuation. Students will learn how to evaluate financial statements and perform prospective and equity analyses. Students will acquire knowledge on how to recast and adjust financial statements to estimate of the intrinsic value of the firm.
- Have an idea about the place and the role of financial analysis in the system of management of the economic entity.
- Understand the essence of financial terms and to use them properly.
- Have basic practical skills in financial statement analysis and interpreting financial information.
- Demonstrate deep knowledge and critical understanding of theories, principles, concepts and methodologies in financial statement analysis.
- Apply a set of diagnostics to assess the quality of the accounting in financial statements.
- Evaluate the impact of financial reporting choices on the quality of accounting information including reported earnings.
- Use strong analytical skills and apply them to solve practical problems.
- Work effectively in a team environment.
- Topic 1. Overview of Financial Statement AnalysisTypes of Business Analysis. Components of Business Analysis. Financial Statements- Basis of Analysis. The Annual Report. Comparative Financial Statement Analysis. Ratio Analysis. Cash Flow Analysis. Specialized Analysis Tools.
- Topic 2. Financial Reporting and AnalysisFinancial Reporting Environment. Nature and Purpose of Financial Accounting. Concept of Income. Fair Value Accounting. Introduction to Accounting Analysis. Earnings Management.
- Topic 3. Analyzing Financing ActivitiesLiabilities. Leases. Postretirement benefits. Contingencies and Commitments. Off Balance Sheet Financing. Shareholders’ Equity. Liabilities at the “Edge” of Equity.
- Topic 4. Analyzing Investing ActivitiesCash and Cash Equivalents. Receivables. Prepaid Expenses. Inventories. Introduction to Long-Lived Assets. Plant Assets and Natural Resources. Intangible Assets.
- Topic 5. Analyzing Investing Activities: Intercorporate InvestmentsPassive investments. Investments with Significant Influence. Business Combinations. Derivative Securities.
- Topic 6. Analyzing Operating ActivitiesIncome Measurement. Non-recurring items. Revenue and Gain Recognition. Deferred Charges.
- Topic 7. Cash Flow AnalysisStatement of Cash Flows. Reporting Cash Flows from Operations. Analysis Implications of Cash Flows. Specialized Cash Flow Ratios.
- Topic 8. Return on Invested Capital and Profitability AnalysisImportance of Return on Invested Capital. Components of Return on Invested Capital. Analyzing Return on Net Operating Assets. Analyzing Return on Common Equity.
- Topic 9. Prospective AnalysisThe Projection Process. Short-term Forecasting.
- Topic 10. Credit AnalysisLiquidity and Working Capital. Operating Activity Analysis of Liquidity. Additional Liquidity Measures. What If Analysis. Importance of Capital Structure. Capital Structure Composition and Solvency. Earnings Coverage. Capital Structure Risk and Return.
- Topic 11. Equity Analysis and ValuationEarnings Persistence. Earnings Based Equity Valuation. Earning Power and Forecasting for Valuation.
- In-class activitiesIndividual or in small groups, in-class, open book
- Midterm testIndividual, in-class, open book
- Team projectIn small groups, at home with follow-up in-class presentation, open book
- Final examIndividual, in-class, closed book
- Промежуточная аттестация (4 модуль)0.5 * Final exam + 0.15 * In-class activities + 0.15 * Midterm test + 0.2 * Team project
- Financial statement analysis, Subramanyam, K.R., 2014
- Fridson, M. S., Alvarez, F., & FinancePro. (2011). Financial Statement Analysis : A Practitioner’s Guide (Vol. 4th ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=517757
- Fridson, M. S., & Alvarez, F. (2011). Financial Statement Analysis Workbook : A Practitioner’s Guide (Vol. 4th ed). Hoboken N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=382138